FDI in China surges despite economic slowdown

Beijing: Foreign direct investment in China rose by 4.9 percent in the first half of this year, official data showed on Wednesday, despite sliding growth in the world’s second-largest economy.

China’s Foreign direct investment (FDI) for the month of June increased by 20.12 percent from the same period of 2012 to USD 14.39 billion, the Chinese Ministry of Commerce (MOC) announced today.

The figure marked an increase in FDI for the fifth consecutive month since February, when China reported an FDI recovery after seeing months of decline since June 2012, the ministry said.

The surprising FDI data for June did not include overseas fund influxes in banking, securities and insurance sectors, but still marked a significant upsurge from a 0.29 percent year-on-year increase seen in May, the MOC said.

“The FDI increase proved the competitiveness of the Chinese economy and international investors’ recognition of the investment environment in China,” MOC spokesman Shen Danyang said at a press conference.

“But we can not conclude that China’s FDI has rebounded by simply looking at just a single-month’s data. We expect the FDI in the second half to grow steadily,” he added.

The nearly 5 percent year-on-year increase in FDI inflow in China for the first half of 2013 takes the total to USD 61.98 billion.

The steady flow of FDI is good news for Chinese government which was down cast over the continued slowdown of the economy.

The Q2 Gross domestic product (GDP) declined to 7.5 percent, the ninth quarter in the last 10 that expansion has weakened, amid speculation that China for the first time will miss official target of 7.5 percent set for this year. Officials admit that the economy may even contract to below seven per cent by the end of this year.

The FDI flows appeared steady during the first six months of the fiscal in which China approved the establishment of 10,630 foreign-invested enterprises, down by 9.18 percent from a year earlier.

Nearly half of the new FDI in the January-June period went to the service sector, which saw a year-on-year increase of 12.43 percent.

While the service sector saw 49 percent of the total FDI inflows, the manufacturing sector attracted USD 26.44 billion of foreign investment with a 42 percent share, down by 2.14 percent, state-run Xinhua news agency quoted Shen as saying.

FDI from Japan was up 14.4 percent in the first six months from a year earlier to USD 4.7 billion while inflows from 10 Asian nations rose 5.3 percent in the first half from a year earlier to USD 53.8 billion, which included USD 39.7 billion from Hong Kong.

Investment from the European Union and the United States jumped to 14.68 percent and 12.29 percent respectively, to USD 4.04 billion and USD 1.83 billion in the first half.

China’s western regions saw strong growth in foreign investment, with an increase of 32.54 percent, compared with a 15.75 percent gain in central regions and a 1.69 percent gain for the east.